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This has been a consistent ATI problem, on more than 1 card, most recently the X300. I develop on nvidia so I haven't given much attention. Time to fix things though.
The texture quality gets progressively worse the farther I move away from the origin. By the time I get about 1000 units away (too small for precision problems) the artifact starts to show itself. By the time I am on the far side of the map the filtering looks like NEAREST rather than LINEAR, but the texture quality even deteriorates beyond that and starts looking like they are coming from the mipmap chain. Mipmapping is enabled with trilinear filtering, texture compression makes no difference, fooling with driver settings makes no difference. I am stumped, has anyone else ever experienced this?